Embracing Limits: A Case for Maximum Economic Thresholds to Mitigate the Global Climate, Biodiversity, and Equity Crises
By Paloma Henriques
Capitalism’s demand for continuous economic growth is driving the climate and biodiversity crises, while continuing the legacy of colonialist exploitation. Efforts to reduce emissions linked to cycles of consumption and production are increasing; however, there are great opposing forces. While the affluent continue amassing wealth and power, changing the system will continue to be extremely difficult. New policies, like taxes on wealth, income, and inheritance, maximum wealth or income, and maximum pay ratios, are needed to erode this opposing force. While a minimum wage has been implemented in many countries, the idea of a maximum wage is still peripheral (Alfredsson et al. 2018; Monbiot 2012). Pay ratios, the ratio of the top-earning employee of a business to the average worker, have ballooned rapidly – from 20:1 in 1965 to 320:1 in 2019 – in the 350 biggest U.S. companies (Melin 2021). Embracing upper limits as well as lower thresholds is a necessary step in the process of dismantling the entrenched power structures that not only consume resources and emit greenhouse gases disproportionately, but exert undue cultural and political influence, overwhelming efforts to mitigate ecological and social crises (Alfredsson et al. 2018; Weidmann et al. 2020).
When I’ve asked natural scientists what they see as the main driver of climate change, the answer I almost always get is the increasing human population of Earth. Though a growing human population is currently unsustainable and demands major restructuring of resource allocation, this view often leaves out variations in power, politics, affluence, and the attending emissions within that extremely unequal population. Rosa and Dietz (2012) demonstrate that population stress on the environment is not only related to the size and rate of increase, but also to consumption, which rises with affluence. In other words, economic growth has “positive” (increasing) “effects on emissions” (Li and Lin 2015, p. 1119). Numerically, “…the world’s top 10% of income earners are responsible for between 25 and 43% of environmental impact. In contrast, the world’s bottom 10% income earners exert only around 3–5% of environmental impact” (Weidmann et al. 2020, p. 3). This inequality manifests in different ways depending on how emissions are accounted for – by production, by consumption, or by profit (Hoornweg et al. 2011) – and the ways that we account for emissions shapes the narrative and politics of our response to climate change (Knox 2014).
In accounting for emissions, boundaries are created, dissolved, and redefined. Boundaries of space and time factor in to where responsibility lies; developed countries have benefited from the sources of emissions since the Industrial Revolution of the mid-1800s, and production and consumption are often separated by thousands of miles through global supply chains (Raupach et al. 2007, p. 10292; Asafu-Adjaye et al. 2015, p. 17). Davis and Caldeira (2010) write that 23% of emissions in 2004 were created in countries where they were not consumed, predominantly “the export of emissions embodied in goods from China to consumers in the United States, Japan, and Western Europe” (p. 5688), thus continuing the movement of net benefits towards developed nations. If accounting for consumption, “the Global North is responsible for 92% of emissions in excess of the planetary boundary (Hickel and Hallegate 2021, p. 3). This “metabolic rift,” or separation of costs and benefits, is seen at a more local scale when examining the rural natural resources that ultimately enable dense urban centers to exist (Rosa and Dietz 2012; Hoornweg et al. 2011). When tracing emissions back to those that consume or benefit from them, we see that affluence, often as a legacy of colonialist conquest (Patel 2017; Isenhour 2016), is driving the climate crisis, and in turn, the poor are most often the ones suffering the consequences (Hoornweg et al. 2011; Hickel and Hallegate 2021; Isenhour 2016).
Grunewald et al. (2017) modeled the relationship of emissions to inequality and found that while in low- and middle-income countries, higher income inequality corresponds to lower emissions (due to many people living in pre-industrial conditions and energy poverty), in generally higher income countries like the U.S., higher inequality is correlated with higher emissions. Grunewald et al. (2017) posits that “in more equal societies, it is easier to arrive at a social consensus on environmental policies and the relative power of groups that benefit from emissions (e.g. owners of capital) is weaker” (pg. #). Weidmann et al. (2020) explains that not only do the affluent drive emissions through consumption, but also “as members of powerful factions of the capitalist class [and] through driving consumption norms across the population” (p. 3). The wealthy influence politics through lobbying (the type where money changes hands directly or indirectly) and have created codependent relationships with governments, propping up politicians and powering think tanks with innocuous sounding names like Americans for Prosperity in exchange for government subsidies (Fouquet 2016; Hertel-Fernandez et al. 2018; Weidmann et al. 2020).
Globally, the fossil fuel industry was subsidized U.S.$4.6 trillion in 2013, accounting for 6% of global GDP (Fouquet 2016, p. 3). In the U.S., the 2013 sum was U.S.$606 billion, 3.75% of the U.S. GDP (Fouquet 2016). Fouquet (2016) argues that this long-standing monetary support creates a path dependency, or lock-in, on fossil fuels that could take decades or centuries to undo. While fossil fuel companies are protected by government subsidies, they present a formidable obstacle to the transition to a renewable energy economy. We have seen their facades crack in the recent exposure of Exxon Mobil and other fossil fuel companies’ campaigns to obscure and cast doubt on climate science (Tabuchi 2021), but their government handouts keep coming in, they will stay artificially strong. Monbiot (2012, p. 272) wrote an exposé discussing how American billionaires are promoting population growth as a crisis that could compromise business, nature and society. This depoliticized conceptualization of population is not just a function of scientific silos but can also be used as an active political tool of the rich to deflect attention away from their role in the climate crisis.
Even economists at the World Bank admit that “[i]t is obvious today that democratic processes are threatened by excessive wealth differences” (Hickel and Hallegatte 2021, p. 9). In conversation with Hallegatte, Hickel (2021, p. 6) references the Washington Consensus – an effort of wealthy nations in the Global North to dismantle attempts in the Global South to form alternative economic systems broadly based around socialism, “economic sovereignty[,] and global justice”. In The Shock Doctrine: The Rise of Disaster Capitalism (2007), Naomi Klein details a series of political and social upheavals in South American that were opportunistically targeted for economic intervention. These upheavals were often instigated by countries of the Global North and were a political opening to introduce free market capitalism as a means of economic control and wealth accumulation. The affluent also lead by example. Celebrity worship and emulation of Western culture create a desire for increased consumption throughout the world (Weidmann et al. 2020). Consumerism is promoted through media and advertisements (Alfredsson et al. 2018) – this is not a passive influence, but rather an active and calculated influence designed for profit.
The United Nations Intergovernmental Panel on Climate Change models different scenarios based on different levels of future emissions; however, all Shared Socioeconomic Pathways (SSPs) are predicated on continual economic growth (Hickel and Hallegate 2021), and “maintain a significant disparity in per capita energy use between the Global North and the Global South” (Hickel et al. 2021, p.768). Even SSP 1, the lowest emission scenario considered, is predicated on “green growth,” the idea that emissions can theoretically de-couple from economic growth given the right technological interventions (Rogelj et al. 2018, p. 325). In analyzing each SSP, Rogelj et al. (2018) conclude that “[a]chieving pronounced emission reductions requires a transformation of the global economy” (p. 327). Kate Raworth’s donut economic model creates a powerful visual for the needed transformation – a new economy with not just lower bounds but upper bounds as well, based on the natural capacity of the Earth (Weidmann et al. 2020). Within the bounds of the economic and atmospheric commons, emissions must be budgeted for, and to do that fairly, wealth needs to be redistributed (Alfredsson et al. 2018; Hickel and Hallegate 2021). Even An Ecomodernist Manifesto (Asafu-Adjaye et al. 2015), in addition to advocating technological fixes, admits the need for changes in “social, economic and political institutions” (p. 29). Weidmann et al. (2020, p. 8) makes the case for “taxation policies, basic income, and job guarantees,” “expanding public services” on the lower bounds, and “setting maximum income levels and rolling back neoliberal reforms (e.g. as part of a Green New Deal)” on the upper bounds. These upper and lower limits work together to make a more equitable and sustainable society.
“… instead of taxing the rich, what if we outlawed the rich? What if the kind of wealth and associated power and influence that the one percent currently holds, became, instead of a desirable dream, socially unacceptable?”
There are movements in the U.S. Congress to tax the rich, institute a Universal Basic Income, and create an alternative accounting system to the Gross Domestic Product – the Genuine Progress Indicator (Talberth 2021). But instead of taxing the rich, what if we outlawed the rich? What if the kind of wealth and associated power and influence that the one percent currently holds became, instead of a desirable dream, socially unacceptable? Fouquet (2016) explains the infrequent “critical junctures,” or opportunities, for interrupting path dependence, such as during initial industrialization or Klein’s shocks (Klein 2007). The COVID-19 pandemic presents one such juncture in which new ideas, campaigns, and legislation have the potential to take hold. Implementing limits on wealth is more urgent now than ever. Though concepts like a maximum income or pay ratio may seem wild or impossible, as Patel (2017) observes, “the outrageous [can] quickly [become] normal” (p. 60).
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